Buying a home in a different state

[Anonymous]

Alright so I live in Louisiana but I have been hoping to be able to help my mom buy her first home (in FL) now that I'm out of college and working. She's been renting almost all of her life. Three things are concerning me.

1) Going half and half on a loan. With what I "bring in" I've been able to put $2000 a month into savings and still pay more than the minimums on all my debts and bills. My DTI is 23% and we are not looking at anything more than $110k. That being said, this isn't a cosign situation where if she jumps ship, I'm left with a forclosure. Rather I would be able to take on the payments and rent it out or something. The concern with this route is if I choose to buy a home over here within the next few years, is having this other mortgage going to be a positive or a negative?

2) My mom can now afford something like this on her own but I would have to help her with the down payment. Which I don't mind just giving it to her so me losing my money is not a concern. She was saying that if I did that, she would like to add my name onto the house. Now I've heard that in order to get on a loan, I would have to put my name on the house but to put my name on the house, would I have to be on the loan? She said a friend told her she did that with a daughter so that when her daughter came around, she would not be considered a first time buyer. I'm confused. Now I know that on cars, being a first time buyer tends to hurt you, but I thought that with buying a house it actually opened the doors to some pretty sweet opportunities. Once again, if its possible, would this be a positive or a negative?

3) Lastly with the banks trying to hold on to every physical dollar, how much would I need to fork over for a DP on a home at about this price. If I did put my name on the loan along with my mothers, would it be considered investment property because I am not in town or would they take into consideration that she is in town and just consider it a personal home? Reason I ask is becuase I believe that the way they classify the property affects the DP. Thanks.

I'm not new to the site, just been on a sabbatical so feel free to throw out all acronyms and the typical lingo. Thanks in advance.

[DallasLoanGuy]

Would the home be within FHA Loan Limits?

[Anonymous]

CY2008 

FHA Forward - One Family, $423,750

CY2009

FHA Forward - One Family, $345,000

[ShanetheMortgageMan]

1.  When you buy your own home, the fact that you have a co-signed mortgage can be both a negative and positive.  The negative is that a lender will include the payment in your debt to income ratio unless your mom is paying the entire amount from a bank account in her own name.. or if she is paying you rent while you pay the mortgage payment, you can make a rental agreement with your mother, she'd pay you rent, you'd claim it as income on your tax returns, and you'd be able to use the rental income to help offset the payment that way (might not be able to fully offset it but at least a portion).  The positive is that you'll already have mortgage history on your credit, further boosting your scores and improving your chances of qualifying.  If you never co-sign for your mom's mortgage, because you alluded to that you wouldn't be, then a new mortgage lender wouldn't even consider that mortgage payment in your debt to income ratio since you aren't obligated to pay it.

2.  Normally spouses are allowed to be on title, but someone who isn't a co-signer nor a spouse is usually not able to be on title of the home.  With an explanation I'm sure certain situations could be found acceptable though (such as in the case of a son/daughter being on title of a home for their elderly parents).  First time homebuying programs usually just require that you have no primary ownership in a property, but each one can have it's own guidelines, so if you were hoping to use first time homebuyer programs then you would want to check into their requirements before agreeing to go on title of your mom's home.

3.  I'm a bit confused because now you are talking about being on the mortgage whereas you originally said you were not going to co-sign.  If your mother is on the mortgage then you can buy it as a primary residence, and then with FHA financing only 3% (3.5% come 1/1/09) is required to put down.  If you choose to go with conventinoal financing then 5-10% would be the required down payment and if the total down payment is less than 20% then your mom would have to put down at least 5% from her own funds.

[Anonymous]

Thanks for the reply... very useful. I see where the confusion is. I said 3 concerns when I meant 3 scenarios and concerns I have with each.

1. The first was both us cosinging the loan. Then in my description I said it won't be a cosiging kind of deal by which I meant that per my explanation, it wouldn't be a cosigning drama like we so frequently read abou in that I won't be in a vulnerable position if she were to not meet her end of the bargain.

2. The second was me only being on the title (if possible) but not cosiging.

3. The last was whether I cosigned or not, what would I expect to have to come up with in the way of a down payment. In other words, if I'm on the loan, how much would we have to come up with. If she was the only name on the loan, how much would she be expected to come up with?

Which brings up another issue, I now remember that I had read on here that loan companies check your funds to make sure you didn't just get a boost from family for the down payment. If I were to need to furnish my mother's downpayment, is there ways of doing so? Is there a way to go around this? Like $500 deposits into her bank account biweekly rather than one big deposit? Mind you I'm not trying to break the rules. But the system isn't exactly designed for families that are real tight-knit like mine. Money moves all around our family like a web.

[BrianB_The_Loan_Professor]

Gifts from family are fine - she will need to fill out a gift letter and you will need to document the transfer